Autos

Shelly Banjo is a Bloomberg Gadfly columnist covering industrial companies and conglomerates. She previously was a reporter at Quartz and the Wall Street Journal.

Toyota Motor Corp. envisions its new artificially intelligent cars will know you so well that you’ll love them, and they’ll love you back.

It’s a strange promise for an inanimate object built of steel, sensors and motors. But when Executive Vice President Didier Leroy introduced the futuristic vehicles at the Tokyo Motor Show this week, his vision called attention to the desperation traditional carmakers are feeling at a time when just about anyone, including vacuum-maker Dyson Ltd., is jumping into the business. 

Slowdown
Shares in most Japanese carmakers have underperformed the broader index in the last year
Source: Bloomberg

Toyota went so far as to denounce its characterization as a carmaker; the company is trying to rebrand as a “human movement company," whatever that means.

Consider this: An increasing number of consumers don’t really care what kind of car they're climbing into when chauffeured by an Uber or Grab taxi. Meanwhile, vehicles are looking increasingly alike as the industry consolidates, supply chains merge and models are built on identical platforms using the same parts.

Watching the Nissan IMx concept car’s retractable steering wheel disappear in self-driving mode makes it seem like consumers will disconnect from the act of driving altogether, prompting them to care even less about the car they’re riding in.

Once that happens, a car becomes no different than a nondescript airplane ferrying you around -- few people can name their plane’s manufacturer because most don’t care. Adopting that attitude toward cars will dent already slowing sales.

Double Take
After years of growth following the 2008 financial crisis, car sales across the world have slowed
Source: Bloomberg

Auto manufacturers are trying to solve this problem at the outset.

Nissan Motor Co., for instance, has partnered with NASA to create a hub similar to an air traffic control tower that supports self-driving cars with a human backstop. Offering this service can forge greater trust of autonomous vehicles and deepen the relationship with Nissan’s brand, the company’s Silicon Valley research chief and former NASA scientist Maarten Sierhuis told Gadfly.

It’s also why companies like Yamaha Motor Co. created an AI-powered motorcycle, called Motoroid, with a goal of what executives called “heightening the unity between rider and machine.”

These information systems will also help carmakers collect consumer data, creating a more personalized driving experience. Just like their relationship with airlines, the longer passengers ride a brand, the more comfortable they’ll get and the harder it will be to switch to a competitor.

The problem is, if cars go the way of airlines, the industry will inevitably have to shrink. The majority of travelers regard airlines as interchangeable and tend to choose flights based on cost, which drives down prices and makes it hard to offer premium options. True loyalty tends to reside with only a subset of higher-end frequent fliers -- a harder proposition for the auto industry, the bulk of which relies on scale.

Air travel also commands a more captive market than autos, whose users have many more alternatives when choosing what to drive or whether to own a car at all. Watching companies jostle over who has the coolest technological bells and whistles at the Tokyo Motor Show reminded me a bit of the dot-com bubble when every business suddenly called itself a tech company.

While it’s about time the traditional auto industry embraced technology, it’s hard to see how self-driving cars and artificial intelligence will make consumers want to buy more vehicles.

If anything, the car’s shift from tangible good to ho-hum service will make it harder for automakers to achieve the kind of love connection with their customers that Toyota is promising.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Shelly Banjo in Hong Kong at sbanjo@bloomberg.net

To contact the editor responsible for this story:
Matthew Brooker at mbrooker1@bloomberg.net